Problemgalehouse gas stations inc expects sales to increase, Ask an Expert

Accounting

Problem:

Galehouse Gas Stations, Inc., expects sales to increase from $1,690,000 to $1,890,000 next year. Mr. Galehouse believes that net assets (Assets - Liabilities) will represent 65 percent of sales. His firm has a 11 percent return on sales and pays 35 percent of profits out as dividends.

Required:

Question 1: What effect will this growth have on funds?

Question 2: If the dividend payout is only 15 percent, what effect will this growth have on funds?

Note: Explain all steps comprehensively.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91172516

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